- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 4. Introduction to Linear Regression
- Subject 8. Limitations of regression analysis

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**CFA Practice Question**

What is the effect of a violation of the classical regression assumptions?

II. Low predictive power of the model.

III. Invalid confidence intervals.

I. Invalid hypothesis test.

II. Low predictive power of the model.

III. Invalid confidence intervals.

Correct Answer: I, II and III

All of these effects happen when there is a violation of the regression assumptions.

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